Judge: You Can’t Patent a Kickstarter-Style Funding System
A judge in New York has ruled that a 2011 patent for an invention that lets fans crowdfund creators’ work through a website is invalid, because it’s basically just the age-old system of patronage.
“Even the addition of an element of computer use is insufficient to render it valid,” the judge wrote.
The ruling came down in a case that was brought by Kickstarter, the Brooklyn-based crowdfunding startup. But the patent wasn’t Kickstarter’s: instead, it belonged to a 2000-era startup called ArtistShare, which operates on a similar model that lets fans fund their favorite artists in exchange for perks.
ArtistShare had been trying to get Kickstarter to license its patent, which describes what we now know as “rewards-based crowdfunding.” It’s basically a website that lets fans donate money to an artist in exchange for an “entitlement” (also known as a perk, or reward).
For a more detailed description, here is the patent summary:
The present invention is directed to a system and method for raising financing and/or revenue by artist for a project, where the project may be a creative work of the artist. The method including registering, by at least one artist, with a centralized database, at least one or more projects, offering, by the at least one artist, an entitlement related to the artist in exchange for capital for the project of the artist. The method and system may also include searching, by an interested party, the centralized database, for the least one artist, registering, by the interested party, with the centralized database and accepting the offer by the interested party for the entitlement related to the project. The capital may then be forwarded to the artist and the entitlement provided to the interested party.
And an illustration from the 78-page patent application:
This is the type of patent that some in the technology world would criticize for being frivolous or overbroad, and ArtistShare’s actions are what some might consider patent trolling. ArtistShare’s application shows little originality, as confirmed by the ruling today, not to mention the fact that Kickstarter was in business before the patent was filed.
Rather than license ArtistShare’s patent, Kickstarter sued the company and asked a judge to invalidate the patent for being, in layman’s terms, not a real invention. (Kickstarter has not filed for any patents related to its funding model.)
“We’re pleased the court agreed that this patent is invalid, and we’re happy to see this case reach its conclusion,” Kickstarter deputy general counsel Michal Rosenn said in a statement. “This is a win for artists, ideas, and creative freedom.”
ArtistShare did not immediately respond to a request for comment.
Update, 6/30: ArtistShare CEO Brian Camelio posted a comment on his blog. “Regarding the Kickstarter case, we are currently reviewing the judge’s opinion and our options moving forward,” he wrote. “We are still very proud to have provided the blueprint for the crowdfunding industry by conceiving and launching the Internet’s first ‘crowdfunding’ website in 2003 and we look forward to continuing to innovate and help even more creative artists achieve their artistic dreams through both ArtistShare and latest endeavor FanFunded.com.”